Real Estate News & Commentary by Chris McLaughlin, February 17, 2009
http://www.shortsalesriches.com/welcome.html
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“How to Exploit a Little Known Flaw in the Bailout
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Say it isn’t so…The Donald is getting some egg on his face. Trump Entertainment Resorts Inc. filed for Chapter 11 bankruptcy on Tuesday, immediately following the departure of Donald Trump as its Chairman. The casino missed a $53.1 million bond payment due in December, and it listed its total assets of $2.1 billion and total debt of $1.74 billion in its filing with the bankruptcy court. Trump noted that the casino represented less than 1 percent of his net worth and “my investment in it is worthless to me now.” Too bad the board didn’t get a chance to tell Mr. Trump … YOUR FIRED… since he resigned instead.
And President Barack Obama is headed now to Denver to sign the $787 billion stimulus package. The President will sign the bill at the Denver Museum of Nature & Science, which is meant to emphasize his focus on energy related jobs and “green” buildings.
But stocks weren’t too excited about the stimulus bill today, as the Dow Jones Industrial Average plunged over 250 points to below 7600 as of 10 AM Eastern. Ouch.
Now, on to our real estate investing section…
Real Estate Reality
To hear the markets talk, real estate is a lost cause and only prone to continue a long steep decline; then again, these were the same people that believed real estate could only go up-up-up. Short sale investors and savvy real estate buyers would do well to distinguish fact from fiction for a full picture before deciding where to put their hard earned dollars.
Fact: The pending home sales index increased to 87.7 percent from only 82.5 in November…a level that is actually over 2 percent higher than the same period in December of 2007.
Fact: Home prices are lower which also results in lower property taxes, lower insurance and higher potential resale values. Combined with low interest rate, homes remain more affordable than they have been in years.
Fact: New home construction is falling and continuing to fall each month. While it might not become apparent overnight, new homes are required to replace those that age out over time plus provide for the increased population due to age, immigrations and of course, birth.
Fact: Existing home inventories are shrinking. There is typically a six month inventory of homes on the market but today, that rate has fallen from a high of over one year to roughly 9 months.
Fact: The median home price to income ratio has declined to only 3.6 to 1 from a high of 5 to 1. The historic average is 3.2 to 1 so we are nearing the typical norm.
Fact: The spread between 30 year fixed rate mortgages and ten year Treasury notes is currently at 235 and dropping from a high of above 500. The historic norm is roughly 170 so once again, we are nearing the norm.
As you can see, the facts are clear and evident…short sale bargains may not be on the table forever especially if the federal government begins buying up mortgages and other bad assets in a meaningful way. During the 1970’s, the federal government “held” homes for years since they are not under the same requirements to write-off toxic assets in the same way private corporations must. Consider the facts for yourself then determine if real estate is nearing a bottom. Rather than trying to “time” the market, make a move to secure your position before the opportunity is gone forever. These types of buying deals only come along once in a lifetime. The facts say real estate is nearing historic trends while the federal government simultaneously is running the printing presses and making it harder than ever to work for a living.
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
P.S.
This weekend’s webinar replay is right here…
http://www.webinarwizards.com/custom/index.cfm?id=170879
Copyright Loss Mitigation Institute 2009.
All Rights Reserved.
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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest Real Estate firms, running 4 different
offices, supporting nearly 450 agents, uniquely
positioning him to help thousands of investors
make money in the biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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